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Key takeaways
- Many market watchers expect the Federal Reserve to lower its benchmark rate when policymakers meet in mid-September. Such a move could spur lower rates on high-yield savings accounts.
- For now, competitive savings accounts continue to earn rates above 4 percent APY, after the top APY peaked at above 5 percent last year.
- Savers who are comfortable locking in some funds could benefit from opening a fixed-rate CD now if deposit account rates continue to retreat.
As we approach the Federal Reserve’s next rate-setting meeting in mid-September, market watchers eagerly wait to see whether the central bank will lower its benchmark rate. Because a drop in the federal funds rate leads to lower rates on loans, it can boost personal and corporate borrowing — and so investors and economists view lower rates as a driver of growth.
Conversely, savers have less reason for exuberance at the prospect of a Fed rate cut. In addition to spurring lower borrowing costs, such a move would also result in declines in the juicy interest rates of savings accounts that many have been enjoying in recent years.
Because savings account yields are variable, banks can choose to change them at any time — whether due to Fed rate changes or the need to bring in more deposits. For now, the best high-yield savings accounts are earning annual percentage yields (APYs) above 4 percent.
Today’s best savings account rates
The top savings account APY has slid by around 15 basis points since April, among financial institutions monitored by Bankrate’s editorial staff. Today, the leading rate is 4.35 percent APY, with several runners-up offering 4.30 percent APY.
Here’s a closer look at the leading rates offered by Federal Deposit Insurance Corp. (FDIC)-member banks:
Note: APYs may have changed since they were last updated and may vary by region for some products.
Latest news from the Federal Reserve
The Federal Reserve decided not to change rates at its last Federal Open Market Committee (FOMC) meeting in July for the fifth consecutive policy meeting. Prior to that, officials lowered rates by a total of one percentage point, or 100 basis points, at three meetings in late 2024. APYs on competitive deposit accounts decreased leading up to those Fed rate cuts, and in their wake.
When weighing inflationary pressures and a weakening jobs market, Fed officials may take action by lowering rates when they meet September 16-17. Though that’s not a guarantee, the majority of interest rate traders believe the Fed will cut rates at that meeting, according to data from CME Group.
Trump attempts to fire Fed governor Lisa Cook
Policymakers have held rates steady so far in 2025, political pressure from President Donald Trump to lower rates notwithstanding. In recent news, Trump posted a termination letter to Fed Governor Lisa Cook on social media last week, citing allegations she made false statements on home mortgage applications. The move was described by some as an attack on the Fed as the president pushes for rates to be lowered.
Cook subsequently filed a lawsuit that states the effort to fire her is unlawful and seeks to bar the Fed from removing her.
Neither the type of ‘offense’ the President cited nor the threadbare evidence against Governor Cook would constitute ’cause’ for removal even if the President’s allegations were true — which they are not.
— Language in a temporary restraining order filed by Fed Governor Lisa Cook
Powell talks rate cuts at Jackson Hole
At an annual central banking forum in Jackson Hole, Wyoming in August, Fed Chair Jerome Powell suggested the Fed may be on track for a September rate cut. He referred to signs of a softening job market, while also mentioning the risk of Trump’s tariffs causing higher inflation.
With “policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said at the forum.
Putting the pieces together, what are the implications for monetary policy? In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate.
— Jerome Powell | Chairman, Board of Governors of the Federal Reserve
What falling rates mean for savers
A lower federal funds rate would likely cause APYs on competitive savings accounts to fall, in turn. Even if APYs were to slide further, an FDIC-insured bank account remains a safe, stable place to set aside funds for emergencies or other short-term savings goals.
No matter what happens with rates, the primary benefit of a federally insured savings account is that it provides a safe place for a liquid emergency fund. An added bonus is the elevated rates savers have been enjoying on high-yield savings accounts in recent years.
— Karen Bennett, Senior Consumer Banking Reporter | Bankrate
Consider a CD
If you have three to six months’ worth of expenses in a liquid savings account, a certificate of deposit CD could be a place to earn a guaranteed rate on additional funds. Currently, the best CD rates are similar to those of top high-yield savings accounts. The beauty of a fixed-rate CD in a falling-rate environment is it earns the same rate throughout its entire term — even if the going rates on new CDs decline.
Before committing funds to a CD, however, be sure you’re able to part with the money for the entire duration of the term. This is because most CDs charge an early withdrawal penalty if you take out the money before they mature. This could negate some or all of the interest the CD would earn.
Bottom line
All eyes will be on the Fed when officials decide whether to change rates during the next FOMC meeting in mid-September. For now, competitive savings accounts continue to earn high yields, which is an extra bonus for consumers who use savings accounts as a safe, stable place to save for their goals.
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